Trade-Ideas LLC identified Discovery Communications ( DISCK) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Discovery Communications as such a stock due to the following factors:

  • DISCK has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $54.7 million.
  • DISCK has traded 286,181 shares today.
  • DISCK is trading at 4.11 times the normal volume for the stock at this time of day.
  • DISCK crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

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More details on DISCK:

Discovery Communications, Inc. operates as a media company worldwide. It operates through U.S. Networks; International Networks; and Education and Other segments. DISCK has a PE ratio of 17. Currently there are no analysts that rate Discovery Communications a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Discovery Communications has been 2.0 million shares per day over the past 30 days. Discovery has a market cap of $11.0 billion and is part of the services sector and media industry. The stock has a beta of 1.45 and a short float of 3.4% with 1.60 days to cover. Shares are up 9.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Discovery Communications as a hold. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and attractive valuation levels. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow, a generally disappointing performance in the stock itself and generally higher debt management risk.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Media industry average. The net income increased by 5.2% when compared to the same quarter one year prior, going from $250.00 million to $263.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 4.7%. Since the same quarter one year prior, revenues slightly increased by 1.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • DISCOVERY COMMUNICATIONS INC has improved earnings per share by 13.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DISCOVERY COMMUNICATIONS INC reported lower earnings of $1.58 versus $1.67 in the prior year. This year, the market expects an improvement in earnings ($5.80 versus $1.58).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Media industry and the overall market on the basis of return on equity, DISCOVERY COMMUNICATIONS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Net operating cash flow has declined marginally to $62.00 million or 1.58% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, DISCOVERY COMMUNICATIONS INC has marginally lower results.

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